China-US trade friction and welfare: The role of regional trade agreements

Guanzu Ding, Guangyuan Guo, Caiyun Wu and Jiawen Yu

Economic Modelling, 2022, vol. 113, issue C

Abstract: Since 2018, the U.S. has enacted several waves of import tariff increases on China, and China has imposed retaliatory tariffs on the U.S. Based on a quantitative trade model, we evaluate the impact of this China-US trade friction on the welfare of China and find that the adverse impact on China is larger than it is on the U.S. We further decompose the welfare impact into the terms-of-trade effect and tariff-revenue effect. We also analyze whether and to what extent China's involvement in the Regional Comprehensive Economic Partnership (RCEP) offsets the losses due to trade friction. Our model shows that the RCEP slightly benefits China by reducing the negative impact of China-US trade friction by 11.92%, with Manufacturing of Metal Products being the largest contributor to this effect.

Keywords: China-US trade Friction; RCEP; Welfare effects; Terms of trade; Tariff revenue (search for similar items in EconPapers)
JEL-codes: F13 F14 F17 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:113:y:2022:i:c:s0264999322001237

DOI: 10.1016/j.econmod.2022.105877

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